What practice is prohibited by the Robinson-Patman Act?

The Robinson-Patman Act, enacted in 1936, aims to protect competition by prohibiting certain types of discriminatory pricing practices. Price discrimination specifically refers to the practice of charging different prices to different purchasers for goods of like grade and quality, under conditions that could harm competition. This act is significant in ensuring that all buyers have an equal opportunity to compete fairly in the marketplace.

In contrast, price optimization involves setting prices based on consumer behavior and willingness to pay, which is a common pricing strategy not inherently prohibited by the Robinson-Patman Act. Market segmentation is a marketing strategy that allows businesses to target specific groups of consumers based on various criteria, which does not conflict with the provisions of the Act. Competitive pricing reflects a business's strategy to align prices with competitors to ensure market competitiveness, rather than engaging in discriminatory practices against other sellers. Therefore, price discrimination stands out as the practice explicitly restricted by the Robinson-Patman Act to foster fair competition and protect smaller businesses from unfair pricing tactics by larger competitors.